Each one in plain English, with the numbers worked through for a shareholder.
17 May 2012drilling result● NeutralMajor
Extorre says the current market for its shares does not reflect the value of Cerro Moro and is evaluating a staged mine development, funding the rest of the PEA-3 capex from operating cash flow and pursuing the least dilutive financing; parameters are promised before month end. It also reported 64 more holes, including 5.00 m at 54.0 g/t gold and 7,155 g/t silver in Zoe hole MD1552, with over 100 more holes awaiting assay and eight Zoe East holes returning only minor gold so far.
Extorre released PEA-3 for Cerro Moro, the study scheduled for late Q1 2012: preferred 1,300 tpd case gives about 248,036 gold-equivalent oz/yr for the first 5 years, 9-year mine life, initial capex about US$284M including refundable VAT (up from US$149.8M direct plus US$25.7M VAT in PEA-2), pre-tax NPV (5%) US$737.4M and after-tax IRR 47%. Mine site cash costs are US$303/oz (first 5 years) and the study includes inferred resources, so the company notes there is no certainty it will be realized; an EIA addendum for the higher throughput is to be prepared over the next 60 days.
Extorre reported assays for 83 more Cerro Moro holes (36 in-fill/step-out at Zoe, 47 at other veins), with Zoe highlights such as 3.72 m at 52.8 g/t gold and 4,299 g/t silver in MD1447; 15 of the 36 Zoe holes gave significant results and the rest were narrow and/or low grade. Two intercepts (MD1452, MD1457) are near surface, and the company says a Preliminary Economic Assessment is scheduled before March 31, 2012, continuing the PEA-3 timing set in December 2011.
Extorre filed the updated Cerro Moro resource report by Cube Consulting (dated December 16, 2011): Indicated 1.35 million gold-equivalent ounces (2.42 Mt at 7.4 g/t gold and 498 g/t silver) and Inferred 1.05 million gold-equivalent ounces (4.74 Mt at 3.5 g/t gold and 172 g/t silver). This delivers the Q4 2011 resource update (including Zoe) that was pending, and compares with 927koz indicated and 396koz inferred gold-equivalent in April 2011. PEA-3 is now scheduled for late Q1 2012, and cash is stated as CDN $27 million.
Extorre reported final assays for the last 33 of about 100 holes to go into the first formal resource estimate for the Zoe discovery at Cerro Moro, including 7.70 m at 10.1 g/t gold and 3,285 g/t silver in MD1362. Of the 33 holes, 14 were low grade and/or narrow in the main structure. The independent consultant's estimate, covering Zoe, Martina, Carla and Esperanza-Nini, is now expected in early November 2011, within the Q4 timing given before; cash is stated as $38 million, down from $42 million in August.
Extorre filed the full NI 43-101 technical report behind the second Preliminary Economic Assessment (PEA-2) for Cerro Moro, prepared by GR Engineering Services, with an effective date of August 2, 2011 and resource date of May 31, 2011. It is the formal paperwork for the PEA-2 results announced in August, not new results; the visible text does not show new economics, and the excerpt notes it is based on the April 2011 resource and excludes the later Zoe discovery.
Extorre reported results for 20 more holes at the Renaldo area of its 100%-owned Puntudo project, including 3.8 m at 2,154 g/t silver and 3.34 g/t gold in RD0020A; drilling indicates a mineralized body about 750 m long, open to the southeast, 1 km from the Coeur d'Alene/Mirasol Joaquin resource. Step-back drilling is scheduled and the next drill season is in October; the company says Cerro Moro remains its primary focus, expects 24 more Zoe holes within two weeks, and reports $42 million in cash.
Extorre released a second Preliminary Economic Assessment (PEA-2) for Cerro Moro: 1,000 tonnes/day, 8.25-year mine life, average 206,300 gold-equivalent oz/yr for the first 3 years at US$236/oz cash cost, initial direct capital US$149.8M plus US$25.7M refundable VAT, and pre-tax undiscounted cash flow of US$581M, using US$1,320 gold and US$26 silver. This follows the October 2010 PEA, with higher capital and operating costs than that study (133,500 oz/yr, US$201/oz, US$131M capex). It excludes Zoe, and the company says it is only a preliminary assessment with no certainty the economics will be realized. The approved EIA covers 750 tpd, so an addendum is needed for higher rates; the resource update including Zoe is still scheduled for Q4 2011, and cash is about $44 million.
Extorre reported drilling results from veins at Cerro Moro other than Zoe, such as 7.37 m at 6.3 g/t gold and 853 g/t silver in hole MD1254 (Gabriela) and 10 m at 17.5 g/t gold and 544 g/t silver in MD1261 (Carla). It has put five rigs on Zoe and left one on regional targets. The updated resource estimate, which will include Zoe, is now said to be expected in Q4 (earlier given as Q3/July), and an updated PEA excluding Zoe is expected in July 2011; the company cites about $45 million in cash. The release says the EIA was approved May 17, versus May 16 in earlier filings.
A third batch of Zoe results reports 9 more holes, including 8.00 m at 8.4 g/t gold and 1,332 g/t silver in MD1220; 34 holes now define about 1.5 km of strike. The company says near-surface mineralization is lower grade than at depth, so it will start step-back drilling and is considering moving two rigs from Puntudo to Cerro Moro in mid-June. It also notes that the Cerro Moro environmental impact assessment was approved on May 16, 2011, and cash is about $26 million.
Extorre reports a silver-gold discovery, the Renaldo Prospect, at its 100%-owned Puntudo project, south of the Coeur d'Alene/Mirasol Joaquin project; 32 holes drilled and 15 assayed, with results such as 3.0 m at 695 g/t silver and 0.66 g/t gold in RD0004. The two Puntudo rigs will move to Cerro Moro for the southern winter, so Puntudo drilling pauses while Zoe drilling is stepped up. The company states the Cerro Moro environmental impact assessment was approved May 16, 2011, and expects its pre-feasibility study in Q2 2011; cash is about $26 million.
Further Zoe drilling continues the April results: 10 more holes, including 8.60 m at 39.9 g/t gold and 4,056 g/t silver in MD1213. The company says high grades are now shown over a 350 m strike length and up to 240 m depth, with the structure confirmed over 1,400 m, and cash is about $32 million. Mining permits for Cerro Moro are expected before the end of Q2 2011, per the company.
Extorre reported its first drill results from a new discovery called Zoe at its Cerro Moro project in Argentina, including 4.84 m at 64.6 g/t gold and 7,530 g/t silver (190.1 g/t gold equivalent) in hole MD1204. The company says it is putting 50% of its drill rigs on Zoe and wants Zoe included in the resource update it scheduled for Q3 2011 (the release elsewhere says July 2011); it also cites about $33 million in cash.
